The following are selected account balances from Penske Company and Stanza Corporation as of December 31, 2021:

On January 1, 2021, Penske acquired all of Stanza’s outstanding stock for $680,000 fair value in cash and common stock. Penske also paid $10,000 in stock issuance costs. At the date of acquisition, copyrights (with a six-year remaining life) have a $440,000 book value but a fair value of $560,000.

a. As of December 31, 2021, what is the consolidated copyrights balance?

b. For the year ending December 31, 2021, what is consolidated net income?

c. As of December 31, 2021, what is the consolidated retained earnings balance?

d. As of December 31, 2021, what is the consolidated balance to be reported for goodwill?

Transcribed Image Text:

Penske Stanza Revenues $(700,000) $(400,000) Cost of goods sold Depreciation expense Investment income. 250,000 100,000 150,000 Not given 80,000 200,000 -0- Dividends declared. 60,000 (600,000) 400,000 Retained earnings, 1/1/21. Current assets. Copyrights Royalty agreements (200,000) 500,000 900,000 400,000 600,000 1,000,000 Investment in Stanza Not given (500,000) (600,000) ($20 par) (150,000) -0- Liabilities.... (1,380,000) (200,000) ($10 par) (80,000) Common stock Additional paid-in capital.